The Investment Dealers Association of Canada reports that its board of directors has approved amendments to its regulations to permit the use of an alternative approach for calculating the capital requirements for certain private placements of restricted securities during the underwriting distribution period.

“The rule change introduces an alternative approach for calculating the capital requirements for underwriting requirements to properly reflect the lower risk associated with private placements of four-month restricted securities during the underwriting distribution period,” the IDA explains in a bulletin to members.

“This alternative approach enables member firms to determine their underwriting capital requirement based on the margin rate that would otherwise apply to an unrestricted securities offering of the same issuer, subject to certain margin rate percentage minimums,” it adds. Firms may continue to calculate their underwriting capital requirement for private placements of restricted securities in accordance with the requirements set out in the IDA regulations.

The amendments are effective for underwriting commitments entered into on or after November 20.